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FOR IMMEDIATE RELEASE
OLDWICK - SEPTEMBER 10, 2021 04:04 PM (EDT)
AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Armed Forces Insurance Exchange (AFIE) (Leavenworth, KS).
The ratings reflect AFIE’s balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).
The negative outlooks reflect AM Best’s concerns over the company’s operating performance given its prolonged inability to generate favorable operating results, which has led to surplus erosion and a decline in overall risk-adjusted capitalization. Adverse operating results have persisted for five consecutive years and resulted in the exchange’s five-year average combined and operating ratios reaching levels that compare unfavorably with AM Best’s personal property composite. The adverse operating results were due to frequent and severe weather-related events, particularly in 2020 with 13 named hurricanes making landfall in the United States. As a result, the company’s policyholder surplus has fallen nearly 38% during the latest five-year period. Management has implemented numerous actions to stabilize performance and increase capitalization. These actions include aggressive rate increases, property inspections, and adding affinity partnerships. However, the benefit from these actions remains to be seen.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.